CNN PRESENTS

The Unfinished War: The Legacy of Desert Storm

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. (BEGIN VIDEOTAPE)

BRENT SADLER, HOST (voice-over): A new war launched.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: There can be no peace in a world of sudden terror.

SADLER: An old war unfinished.

GEORGE H.W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: Tonight the battle has been joined.

SADLER: Will the war on terror move to Iraq?

GEORGE W. BUSH: My message is, is that if you harbor a terrorist, you're a terrorist. If you feed terrorist, you're a terrorist. If you develop weapons of mass destruction, you'll be held accountable.

SADLER: The Bush administration has said it has no evidence linking Saddam Hussein to the attack of September 11.

CONDOLEEZZA RICE, NATIONAL SECURITY ADVISER: Iraq was a problem before September 11, and is a problem after September 11. That is a regime that is determined to threaten the region, our interests, not to mention its own people.

GEORGE W. BUSH: As for Mr. Saddam Hussein, he needs to let insectstors back in his country to show us that he is not developing weapons of mass destruction.

SADLER: Just how serious a threat is unknown.

UNIDENTIFIED MALE: I've had no choice but to postpone the inspection.

SADLER: Three years have passed since the United Nations last conducted weapons inspection in Iraq.

SADLER: The U.N. Security Council recently extended the sanctions on trade with Iraq, and the United States has not ruled out stepping up its military action.

GEORGE W. BUSH: You ought to let the inspectors back in.

QUESTION: If he does not do that, what will be the consequence?

GEORGE W. BUSH: That's up for him -- he'll find out.

SADLER: Strong words from the president about a conflict that first commanded the world's attention more than a decade ago when a different Bush was in the White House.

GEORGE H.W. BUSH: As I report to you, air attacks are underway against military targets in Iraq.

UNIDENTIFIED MALE: In conjunction with the forces of our coalition partners, the United States has moved under the code name Operation Desert Storm. The liberation of Kuwait has begun.

UNIDENTIFIED MALE: Baghdad's lights were still blazing when the strike planes found their first targets.

UNIDENTIFIED MALE: If you're still with us, you're going to hear the bombs now that are hitting the center of the city.

UNIDENTIFIED MALE: The skies over Baghdad have been illuminated.

UNIDENTIFIED MALE: Now there's a huge fire, we just heard.

UNIDENTIFIED MALE: This feels like we're in the center of hell.

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SADLER: Iraq's President Saddam Hussein pledged his troops to the mother of all battles. Operation Desert Storm then quickly drove his armies from Kuwait. But despite Iraq's crushing military collapse and a decade of crippling sanctions, Saddam Hussein still holds power, seemingly unshaken by plots to eliminate him.

In this hour, we will revisit the key elements of the Gulf War and tell the story of what's happened since: of a leader, once an outcast on the world stage, now coming in from the cold; of a once united Western alliance and a divided United Nations; of Iraq and "The Unfinished War."

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(voice-over): Saddam Hussein, the man who challenged the most powerful nations on Earth to do battle in the sand, is still in power: his notoriety undiminished.

DAVID WELCH, U.S. ASSISTANT SECRETARY OF STATE: Saddam represents one of the darkest forces in modern Arab history. Here is a person, who, for the sake of his own grasp for power and ambition, has been willing to execute hundreds, thousands of his own citizens.

GEN. BRENT SCOWCROFT, FMR. NATIONAL SECURITY ADVISER: One of the reasons he has been so successful is that he terrifies everyone who works for him, like personally executing people in front of his colleagues, or having somebody execute his best friend to show his loyalty. He is one of the most ruthless people that the world has ever seen.

SAID K. ABURISH, AUTHOR, "SADDAM HUSSEIN: THE POLITICS OF REVENGE": We are talking about a thug, but a thug who is the most methodical Arab leader this century. Saddam Hussein is tribal in his thinking. You can look at him as two people: a man who operates out of the 17th century and a man whose foot is in the 20th century. And he is marching very fast into the 21st century.

SADLER: It should be noted that Iraqi officials refused the producers of this program access to their country. Saddam Hussein has ruled Iraq for almost 25 years. Time and again, his ambitions for himself and for his nation have led him into conflict. In 1918, Iraq started an eight-year war with neighboring Iran.

The prolonged battle would leave Iraq in dire economic straits. To finance that war, Saddam Hussein borrowed money from his Arab neighbors, including Kuwait. When Kuwait began to call in those debts and pump oil from a disputed border field, Saddam Hussein responded by flexing his muscles again.

ABURISH: What was at work at that particular time was the fact that he's insulted by people who are not entitled to insult him, small Kuwait. So, I'm going to come in here. I'm going to teach you a lesson, but, work politics overall, their action of the West, he didn't think of that one single bit. His tribal mind superseded his modern mind in that case.

SADLER: In fact, Saddam Hussein's squabble with Kuwait triggered the world's largest military operation since World War II. In response to the Iraqi aggression, a military coalition of 34 countries was formed. The United States, Great Britain, France, and Russia with the crucial support of Arab nations like Saudi Arabia, Syria, Egypt, drew up their forces in the deserts to the south and west of Iraq and Kuwait.

The entire Middle East appeared to be at risk from Saddam Hussein's weapons of mass destruction. He had an active nuclear weapons program, hundreds of short- and medium-range missiles, and an arsenal of chemical munitions. And Saddam Hussein had used chemical weapons before.

Iraq's military used poison gas against the Iranians during the Iran-Iraq War. And he used mustard gas against his own people in the Kurdish town of Halabja, where hundreds died. According to Physicians for Human Rights, trace elements of the nerve agent sarin were discovered after an assault on the village of Birjinni.

As the Gulf War began, there was widespread fear Saddam Hussein would try to escalate the conflict by using nonconventional weapons.

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CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: There is another launch.

UNIDENTIFIED MALE: Here in Eastern Saudi Arabia, an air raid is on. Everyone is being told to scramble.

UNIDENTIFIED MALE: And as of right now, we have reports of five Patriot -- five Scud missiles coming in toward us

UNIDENTIFIED MALE: There were five explosions between Takila (ph) and Tel Aviv...

UNIDENTIFIED MALE: This one appears to be another conventional weapon Scud attack.

WOLF BLITZER, CNN CORRESPONDENT: There were two explosions in Tel Aviv.

UNIDENTIFIED MALE: A lot of panic at the scene; people being carried in stretchers. You see people in gas masks. There is always the threat of a chemical attack.

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SADLER: Over the course of the war, more than 70 Scud missiles would strike targets in Israel and the Gulf states. In the end, Saddam Hussein never did launch, as many feared he might, a nonconventional warhead.

(on camera): Such fear and suspicion did not go away after Iraq succumbed to Desert Storm. It led to the United Nations Security Council adopting Resolution 687, empowering a unique team of U.N. inspectors to destroy Iraq's capacity to use or make such weapons.

UNIDENTIFIED MALE: This resolution is tough, but it is fair.

SADLER (voice-over): And the resolution had teeth. The strict economic sanctions imposed on Iraq since the invasion of Kuwait were to remain in place until full compliance was assured. An international group of scientists, engineers and weapons specialists assembled for the task. They were called the United Nations Special Commission, UNSCOM. Their job: To ensure Iraq complied with U.N. Security Council demands to disclose, destroy or render harmless all weapons of mass destruction.

In 1991, the first UNSCOM weapons inspectors began work in Iraq. Former U.S. Marine intelligence specialist Scott Ritter was one of them.

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SCOTT RITTER, UNSCOM WEAPONS INSPECTOR: You are denying access.

UNIDENTIFIED MALE: I am not denying you.

RITTER: So, let me go.

UNIDENTIFIED MALE: You are not allowed go until you... (CROSSTALK)

RITTER: So, you're denying me access?

UNIDENTIFIED MALE: Not denying. I am not denying.

RITTER: Thank you.

UNIDENTIFIED MALE: No, I am not denying.

RITTER: So, let's go.

UNIDENTIFIED MALE: No, not go. We are waiting.

RITTER: Are you denying me access, yes or no?

UNIDENTIFIED MALE: No, I am not denying you.

RITTER: So, let's go.

UNIDENTIFIED MALE: We are waiting.

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RITTER: The inspection I was involved in was a no-notice, intrusive, on-site inspection designed to uncover evidence of how Iraq was hiding their weapons. We didn't expect them to cooperate.

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RITTER: See this roadblock? See that guard with a gun? That's violation.

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RITTER: We knew it would be confrontational.

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RITTER: Get it out of our way and let us through.

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RITTER: But, you know, we're like the proverbial camel. Once you let our nose under the tent, we're coming in.

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UNIDENTIFIED MALE: We are also pick another way because...

RITTER: You can't pick another way. You have no say in matter.

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RITTER: You're not going to stop us

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RITTER: I don't care what you accept and what you don't.

UNIDENTIFIED MALE: Care or resent. You must care.

RITTER: I don't care.

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RITTER: And once the Iraqis started admitting a lie, we were on them.

SADLER: UNSCOM's detective work revealed indisputable evidence of both chemical and biological weapons. As the U.N. inspectors worked alongside their Iraqi counterparts, the level of cooperation and tolerance would vary.

But by 1993, at the chemical weapons decommissioning site of Al- Muthana, the very scientists who had overseen the manufacture of Saddam Hussein's chemical weapons were overseeing their destruction. Thousands of artillery shells loaded with toxic chemicals, as well as tons of bombs and rockets were going up in smoke. Perhaps the best accepted measure of UNSCOM's success is that it destroyed more of Iraq's weapons of mass destruction than were eliminated by the combined forces of Desert Storm.

Despite all the progress being made, however, the weapons inspectors knew they were at work on a giant jig saw puzzle and that many of the key pieces were still missing.

RITTER: We come to an interesting problem, because the Iraqis didn't fully cooperate from the beginning; there is always going to be this level of mistrust. UNSCOM is never going to fully believe what the Iraqis are putting on the table.

SADLER: The UNSCOM team became convinced that Iraq was still concealing parts of its arsenal. Iraq strenuously denied the accusations. When UNSCOM did eventually find its smoking gun, it came from a most unexpected source -- the family of President Saddam Hussein. In August of 1995, Saddam Hussein's two sons-in-law, together with his daughters, defected. One of them, Hussein Kamel, had been in charge of Iraq's Secret Weapons Concealment Operations. He started to reveal the inner workings of the Iraqi armament's program as soon as he arrived in Jordan.

HUSSEIN KAMEL, FORMER IRAQI MINISTER: We were ordered to hide everything from the beginning. And indeed, a lot of information was hidden and many files were destroyed in the chemical and biological programs. These were not individual acts of concealment, but they were the result of direct orders from the Iraqi head of state.

SADLER: Baghdad moved quickly to defuse the situation. They turned over a hoard of documents, claiming that Hussein Kamel had stashed them away on a chicken farm without the authority of the leadership. The boxes contained a treasured trove of information, on every aspect of Iraq's weapons programs. HANS BLIX, EXECUTIVE CHAIRMAN, UN MONITORING AND VERIFICATION COMMISSION: Generally believed that the Iraqi government feared that he would reveal a number of things from Jordan, and that they decided that they would preempt this and that they would discover the files and chicken farm, and place the blame on him.

SADLER (on camera): UNSCOM now had a detailed road map of Iraq's biological and chemical weapons concealment program. After the disclosures, Hussein Kamel hoped he would find a new life outside Iraq.

But his hope turned to despair, after weeks languishing in Jordan, the two brothers allowed themselves to be lured back home, with promises of mercy. It was a fatal mistake; they died in a shootout at the house in Baghdad. The incident was later described in Iraq as a family matter.

(voice-over): Next, the war in the air, and sanctions on the ground.

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GEORGE H.W. BUSH: And we are not trying to systematically destroy the functions of daily living in Iraq. That's not what we're trying to do or are we doing it.

GEN. NORMAN SCHWARZKOPF, U.S. COMMANDER, DESERT STORM: We are going to do it as rapidly as we possibly can, but we're also going to do it in such a way that try to minimize casualties.

WOLF BLITZER, CNN CORRESPONDENT: It is an air campaign at this point, strictly an air campaign.

GENE RANDALL, CNN CORRESPONDENT: Some people believe this is kind of a glorified video game. In fact, it is a deadly serious game, it is war.

SHAW: Gentlemen, if this were surgical bombing, I don't like being this close to the operating table.

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SADLER: For the first 33 days of Desert Storm, the war was waged from a above. The brunt of the allied attacks were focused on Iraq's army occupying Kuwait. Its aim, to degrade those forces, through a conventional bombing campaign. But the airwar had another equally important goal: to destroy Saddam Hussein's command and control apparatus; this goal took the battle to the capital, Baghdad.

(voice-over): Black-and-white pictures from the alliance underscored the accuracy of so-called smart bombs designed to surgically strike preselected targets.

But smart bombs made up less than 5 percent of all the ordinance used against Iraq in Desert Storm. The dramatic images did not show the impact these bombs had on Iraq's troops or civilians.

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SADLER: As you can see, that's the latest Tomahawk cruise missile to fly just over our position here. Anti-aircraft gunners all around trying to shoot them down. So far, three have flown over our heads, all heading for their targets, and I think there's some more coming in over here.

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SADLER: Twenty-eight days into the war, it became apparent that even the smartest technology could not prevent civilian casualties. Laser guided weapons struck a presumed military target: It also served as a bomb shelter.

UNIDENTIFIED FEMALE: You bastard! You lousy bastards!

SADLER: Iraq's infrastructure: bridges, roads, water, and electrical power systems were severely damaged. Many Iraqis lost services, vital to daily life.

(on camera): By war's end, one of the most prosperous and modern Arab countries in the Middle East lay in economic ruin; if Iraqis had expected life to improve, they were mistaken.

(voice-over): Indeed, 10 years on, their economy is barely functioning. Iraq's oil revenues are managed by the United Nations, and strict sanctions remain in place on what can and cannot be imported. These trade restrictions have contributed to a spiraling humanitarian crisis for the country at large. A recent UNICEF study drawing a world health organization support and Iraqi data, states that half a million Iraqi children under 5 have died unnecessarily. Under prewar living conditions, they would have survived.

Few Western observers dispute that the regime's defiant posture towards the U.N. has added to the suffering of its own people. Nevertheless, the sanctions have inspired a bitter blame game.

SIR JEREMY GREENSTOCK, BRITISH AMBASSADOR TO THE U.N.: It is very easy to get emotional about sanctions. The fact is that the Iraqi government never considered the options in front of them, with the Iraqi people in mind.

DENIS HALLIDAY, FORMER U.S. ASSISTANT SECRETARY GENERAL: The task at hand to disarm Iraq, not to kill the children and the people of the country, which is exactly what this program is doing.

SADLER: Dennis Halliday is a former assistant secretary general of the United Nations. In 1997, he was appointed the humanitarian coordinator in Iraq. In 1998, he resigned in protest. HALLIDAY: You've got 10 years of sanctions where there is massive malnutrition amongst children, in particular, including chronic malnutrition, which is -- leaves permanent damage, mental and physical damage to this sort of sanctions' generation that we in the United Nations have created.

We cannot have the United Nations, the guardian of well-being, sustaining a regime of embargo or sanctionings on a people that impacts only on the people, not on the decision-makers, not on the government -- and more than impacts: It kills the people. We are, in my view, guilty, through the Security Council, of committing genocide in Iraq.

SADLER: The U.N. denies such charges, as does Great Britain and the United States.

GREENSTOCK: I don't think it helps to talk in these terms. They don't mean anything. Clearly, the international community would like the Iraqi economy and the Iraqi people to be restored to their normal operations, the normal talents of the Iraqi people. There is no argument with them. The argument is only with the regime.

DAVID WELCH, U.S. ASSISTANT SECRETARY OF STATE: The international community is in the lead in trying to ameliorate effects of sanctions. And the regime in Baghdad is in lead in trying to aggravate them on its own people and then turn around and present this case to the -- you know, the people who are well-intentioned, but frankly a little soft-minded, and say that it is our fault. I think that is explicitly not true.

SADLER: Iraq views the actions of the alliance rather differently.

SAEED HASAN, FORMER IRAQI AMBASSADOR TO THE U.N.: Their real agenda is not to implement Security Council resolutions or clean Iraq from weapons of mass destruction. Their real agenda is to tackle the Iraqi government, is to dismantle Iraq and to destroy this country.

SADLER: Denis Halliday has leveled another charge. According to international health experts, epidemics of cholera, dysentery, and hepatitis have plagued Iraq. These diseases come from water-borne contamination, contamination that Halliday blames on the targeting of Iraq's infrastructure during the Gulf War. He points to a recently declassified U.S. Defense Intelligence Agency document issued at the start of the conflict.

It laid out Iraq's vulnerable water situation and acknowledged that a shortage of pure drinking water could lead to increased incidents, if not epidemics of disease.

HALLIDAY: I think there is no doubt whatsoever that the Americans had worked out the vulnerability of Iraq, in terms of clean, fresh water, and that the treatment of water was absolutely fundamental. And so they set about destroying electric-power capacity, which is essential, of course, for the treatment and distribution of water. WELCH: I can't imagine that people would believe that we honestly would do that. We did target Iraqi infrastructure during Desert Storm. We did it for a military reason and to reduce the risk to us: to accomplish our objective of liberating Kuwait.

SADLER: For a decade, Iraqi civilians have suffered under sanctions. The U.N. has tried to address the problem with an oil-for- food program, set up to allow Iraq to sell oil on the international market in exchange for food and medicine. When this program was first proposed, Saddam Hussein claimed it was a gross intrusion on Iraqi sovereignty. After five years, he finally agreed to the program.

ANDREW MACK, DIRECTOR OF STRATEGIC PLANNING, OFFICE OF THE U.N. SECRETARY-GENERAL: I think what the oil-for-food program did, once medicine and food started to flow -- which didn't happen until the end of 1996 -- is that it has reduced some of the acute suffering that was leading to the death of the under-5-year-olds.

But the real problem, I think, is that the humanitarian impact of these sanctions is a much more subtle one. It is the continual erosion of educational systems, of health systems, the inability of the Iraqi economy to revive, and as a consequence, one can really begin to now I think to talk about a lost generation.

HANS VON SPONECK, FORMER U.N. ASSISTANT SECRETARY GENERAL: Sanctions end tomorrow -- you cannot bring back these 10 years that have been lost by the young people.

SADLER: In 1998, Hans Van Sponeck, became the new head of the U.N.'s humanitarian program in Iraq: 18 months later, he, like his predecessor, Dennis Halliday, resigned in protest over sanctions.

SPONECK: We can expect people entering adult life much less well-prepared than their parents were in facing civic responsibility, in having an ethical and moral grounding when they were taught mainly how to survive under sanctions.

The chances are pretty good that we will see a generation that will not be so favorably inclined toward countries in Europe and North America.

HALLIDAY: These people are no longer focusing on perhaps forms of government or changing the system. They're focusing on survival. We've demolished that very class, the very people, the very professionals amongst the Iraqi population who were thinking about better systems of government.

SADLER: But according to the U.S. State Department, the continuing humanitarian crisis in Iraq should ultimately be blamed on Saddam Hussein.

WELCH: Responsibility is fundamentally the Iraqi government's to take care of its own people. With all the resources going in the oil- for-food program today, the Iraqi government wants to do something, it can do it. It can build a school, it can supply water, it can address the needs of infants, and it can also choose not to do it. And all too frequently it chooses not to do it.

Lifting the sanctions will not automatically help the Iraqi people, because there is something that stands in between. And that is Saddam Hussein.

SADLER: In fact, there are other obstacles. Iraq's imports are closely monitored by the United Nations for so-called "dual use" materials, goods that have both military and civilian applications. Supplies of a wide range of items, from galvanized water pipes to chlorine bleach, have all been tightly restricted by so-called "holds" on contracts.

GENERAL AMER RASHID, IRAQI MINISTER FOR OIL: We have so many holds imposed on our needs by the American and the British representatives within the sanction committee -- there are a lot of delays, a lot of obstacles. So we are not really in control of our funds, to use them for the interests of our people.

SADLER: But in the end, it is oil that continually refocuses the world's attention on Iraq and fears that Saddam Hussein might once more play politics with oil have returned.

(on camera): Both the allied strategic bombing campaign and the sanctions, were used by Saddam Hussein to unite his people against the West, to portray Iraq as a David forced to do battle with Goliath. And despite all its economic woes and isolation, Saddam Hussein's rule over his country appears to be as secure as ever.

(voice-over): When we come back, a world of intrigue in post-war Iraq.

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SADLER (voice-over): After weeks of suffering the brunt of coalition air attacks on his country, Saddam Hussein was issued an ultimatum: Withdraw from Kuwait or risk a ground war. Nearly 630,000 Allied troops were in the region, and on full battle alert. Soldiers from all over the world, ready and waiting to go to war.

As the clock ticked, President George Bush gave one of the most controversial speeches of the war, calling on Iraqis to rise up against their leader.

GEORGE H.W. BUSH: There is another way for the bloodshed to stop, and that is for the Iraqi military and the Iraqi people to take matters into their own hands and force Saddam Hussein, the dictator, to step aside, and then comply with the United Nations' resolutions and rejoin the family of peace-loving nations.

SADLER: As the air war continued, the president's call for the Iraqi people to turn on their leader went unanswered. So did the ultimatum given to Saddam Hussein. (BEGIN VIDEO CLIP)

AMANPOUR: This deadline is the real thing. This could be it.

BLITZER: According to White House clock, Iraq's time has run out.

UNIDENTIFIED MALE: This blitzkrieg operation is moving with such remarkable speed...

BLITZER: The Iraqis appear to have been totally surprised by the power of the ground offensive.

UNIDENTIFIED MALE: The first Allied troops pulled into Kuwait City.

UNIDENTIFIED MALE: The order to withdraw has been given.

GEORGE H.W. BUSH: Iraq's army is defeated. Our military objectives are met.

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SADLER (on camera): The ground war lasted for 100 hours. It was an unambiguous victory for the alliance. Saddam Hussein claimed his troops had been withdrawn from Kuwait. But in truth, it was a rout.

(voice-over): As his defeated forces limped home, Saddam Hussein now had to face opposition from within Iraq. The traditionally rebellious Kurdish tribes in the north, as well much as of the Shiite Muslim community in the south of the country, took up arms against the regime.

AHMED CHALABI, IRAQI NATIONAL CONGRESS: A war took place with encouragement from the president of the United States. The words of the president were followed by leaflets and broadcasts. People believed that, and when they rose up, they expected to get assistance and help from Allied forces in the region.

SADLER: But the rebels found themselves fighting alone.

UNIDENTIFIED MALE: Right now, three army helicopters are about two miles to my right over there, and the Kurdish guerrillas throwing up a great deal of ground-to-air fire.

SADLER: As part of the cease-fire agreement negotiated by General Schwarzkopf, the United States military agreed to let Iraq fly their helicopters. Iraq claimed they were needed to transport their leaders. Instead, they were used as gunships against the rebels.

GEN. BRENT SCOWCROFT, FORMER NATIONAL SECURITY ADVISOR: I suggested to Secretary Cheney and to General Powell that we rescind General Schwarzkopf's permission. They said it would be a serious thing to do. It would undermine his command over his forces and so on. So, I didn't pursue it. It was a mistake. If we had taken it to president, I would have been very strongly opposed to letting them continue to fly.

SADLER: As the revolt spread, the U.S. worried that a fractured Iraq would create more instability in an unpredictable region, chose not to support the rebellion. With no military assistance, the rebels were overwhelmed and crushed.

In the years that followed, Saddam Hussein managed to avoid many challenges to his regime. One of the most intriguing was a 1996 coup attempt allegedly organized by the CIA, using Iraqi military officers. It didn't succeed and the CIA won't comment.

ABURISH: Saddam's security apparatus penetrated the conspirators, and last minute, as the coup was about to take place, they used the same mobile telephones supplied to the conspirators by the CIA to call the CIA headquarters in Aman, Jordan and tell them this is the last you'll hear from your friends because we have them all. Good-bye.

SCOWCROFT: He is so ruthless, and he has three security organizations. They not only protect him, they watch each other. And so it is virtually impossible for any kind of a plot to get going without him finding out about it, and destroying not only the plotters but their families.

So, unless there is a portion of the army which revolts almost instantaneously, I think it is very unlikely that he will toppled.

SADLER: Coming up next: Operation Desert Fox.

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GEORGE H.W. BUSH: We'll kick the (UNINTELLIGIBLE) syndrome once and for all.

CHENEY: It looks like what's happened is that the mother of all battles has turned into the mother of all retreats.

GEN. NORMAN SCHWARZKOPF, U.S. ARMY: I am proud to report to you that Kuwait is free.

GEORGE H. W. BUSH: Aggression is defeated; the war is over.

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SADLER: The victory was sweet, but the reality of dealing with a defeated Iraq would leave a bitter taste.

The U.N. arms inspectors charged with dismantling Iraq's weapons of mass destruction have yet to give Saddam Hussein a clean bill of health. Richard Butler became executive director of UNSCOM, in 1997.

RICHARD BUTLER, EXECUTIVE CHAIRMAN, UNSCOM: The fundamental obligation was on Iraq to hand over the weapons. They never did. They concealed, they made false declarations, they blocked inspections, and they told us a series of lies about their weapons program.

SADLER: UNSCOM's insistence on inspecting Saddam Hussein's own presidential property became a flash point. The Iraqis claimed these inspections were an affront to Iraq's sovereignty, that there were no weapons there. They invited journalists to tour the palaces to make their case.

QUESTION: What's main purpose of this tour?

UNIDENTIFIED MALE: Just to look.

QUESTION: -- don't you like it?

UNIDENTIFIED MALE: Like it very much.

BUTLER: Iraq played the palaces issue rather brilliantly; these wicked foreign inspectors want to go into the sacred places of the Iraqi leader; that was not what we were about. It was about presidential areas which were some 40 square miles containing over a thousand buildings, where warehouses, places where heavy trucks, heavy machinery, relevant documentation were stored.

SADLER: The Iraqi leadership argued that Richard Butler and UNSCOM were changing the ground rules. And that no matter how sincere their efforts, Iraq would always be judged as falling short of full compliance with the U.N. disarmament resolutions.

AZIZ: My God, when am I going to satisfy the Americans who are leading UNSCOM? Who are governing UNSCOM, that I have done my requirements, I have done my commitments, and I'm entitled to the lifting of sanctions.

SADLER: In 1998, the relationship between UNSCOM and the Iraqi leadership deteriorated even further. Reports now surfaced that UNSCOM was involved in an intelligence gathering, with the United States and Israel. Scott Ritter was singled out.

AZIZ: You can judge from his behavior. And his behavior is actually a behavior of a spy.

SADLER: Scott Ritter defends his contacts with Israeli military intelligence as essential to his work in revealing Iraq's Weapons Concealment Program.

RITTER: We developed a working relationship that, you know, matured in the summer of 1995, and was constant up until the time of my resignation in the summer of 1998. Without this relationship, UNSCOM would not have been able to continue as an effective organization. The Israelis delivered on their promise. BUTLER: The security council instructed all states to give UNSCOM all possible assistance. Some 40 states did; amongst them, the United States, and Israel. And that is what happened, and it was within the law.

SADLER: Despite charges caused irreparable damage to UNSCOM and gave Baghdad a ready made reason to halt cooperation with arms controllers. In December, 1998, Richard Butler pulled his inspectors out of Iraq. Less than 24 hours later, the United States, along with Great Britain, launched Operation Desert Fox.

CLINTON: Earlier today, I ordered America's armed forces to strike military and security targets in Iraq.

Their mission is to attack Iraq's nuclear, chemical and biological weapons programs; their purpose is to protect the national interests of the United States, and, indeed, the interest of the people throughout the Middle East and around the world.

SADLER: But according to Scott Ritter, Desert Fox was more than a punitive raid. He believes that intelligence information gathered under the auspices of UNSCOM was now diverted by the CIA to serve American military purposes. The Pentagon had no comment.

RITTER: And they were able to isolate that that night, the time of the strikes, Saddam Hussein would be with his mistress at one two of locations. So the first cruise missiles that hit Iraq impacted where Saddam was going to be. These were villas. These were residential complexes. And the only reason they were struck is because there was a high degree of probability that Saddam Hussein was there.

WELCH: We targeted weapons-of-mass-destruction facilities and their means of control, concealment. There was no intention to target civilians or any other parts of the regime. It will be no disappointment to most Americans, and certainly many official Americans, when Saddam is no longer there. But we are not, you know, trying to bomb his house or anything to make that happen.

SADLER: The question of whether Saddam Hussein was ever specifically targeted during Operation Desert Fox may never be answered. Likewise, the current state of Saddam Hussein's arsenal remains a matter of debate. To this day UNSCOM, withdrawn on the eve of Operation Desert Fox, has never returned to Iraq.

UNSCOM may have exited Iraq, but the United States military never left the skies over the region.

GREENSTOCK: The U.S. and the U.K., and for a while France, took steps by establishing the no-fly zones to make sure that the Iraqis couldn't use their full military to repress their own people. This also had the added effect of restraining Iraqi military power from again threatening Kuwait.

SADLER: Since the creation of the no-fly zones, hundreds of thousands of missions have been flown over Iraq. COLIN POWELL, U.S. SECRETARY OF STATE: We continue to patrol the no-fly zones to keep Saddam Hussein contained.

SADLER: Today, U.S. and British planes take action whenever Iraqi air defenses pose a threat to the patrol of no-fly zones. And American officials have made no secret of their desire to see Saddam Hussein ousted from power.

POWELL: We believe a regime change would be good for the Iraqi people, good for the region. We are trying to find ways to make the Iraqi opposition more effective in this regard.

(END VIDEOTAPE)

SADLER: Saddam Hussein has outlasted his adversaries from Desert Storm. But can he really claim that he is the victor, rather than the vanquished?

Next: a new U.S. president, a familiar foe.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

SADLER (voice-over): President Saddam Hussein's capacity for survival has been proven beyond a shadow of a doubt. In 1998, former President George Bush reflected on his staying power.

GEORGE H.W. BUSH: I thought when the war ended, that he could not survive the humiliating defeat, and every single Gulf country told me the same thing. The British felt the same way. The French felt the same way. Indeed, our whole coalition did. We did not believe that he would stay in office.

But you know something? We underestimated the brutality he would bring to bear on his own people to keep his own self, keep his own person, in office.

SADLER: The 41st U.S. president is still demonized in Iraq. This mosaic of his distorted likeness decorates the lobby of Baghdad's government-owned Al Rashid hotel.

GEORGE W. BUSH: Thank you all for coming to my first Cabinet meeting.

SADLER: Now, there's a new President Bush in the White House. But he has surrounded himself with his father's Gulf War advisers, like Vice President Dick Cheney and Secretary of State Colin Powell.

But the lingering conflict with Saddam Hussein that the new President Bush inherited would become much more urgent after September 11.

GEORGE W. BUSH: The people who knocked these buildings down will hear all of us soon.

CROWD: USA! USA!

SADLER: The United States was attacked, and Saddam Hussein said the U.S. had only itself to blame.

AZIZ: President Saddam Hussein sent two messages to the American people. He said: Let your government contemplate what happened. Contemplate on what happened. Because there are reasons for that, although we do not condone it. But the are reasons. The reasons are the American aggressive, hostile war-mongering attitude and policy towards the whole world, including my country.

SADLER: While Saddam Hussein accuses the U.S. of unwarranted aggression, he did express his sympathy. Not to the American government, but to the American people.

AZIZ: While we do not rejoice the killing of people -- that's against our morals and values -- but you do not expect us to send condolences to the government which is attacking Iraq on daily basis and killing the Iraqi people.

But we did send condolences to the American people. I personally, under the instructions of President Saddam Hussein, sent condolences to those Americans who showed sympathy to the Iraqi people.

SADLER: A tepid response to September 11 that would underscore the already strained relations between the two countries.

Within days of the World Trade Center and Pentagon attacks, investigators identified the 19 alleged hijackers. But how did they do it? Who planned it? Who financed it?

GEORGE W. BUSH: We know we've got a suspect.

SADLER: Osama bin Laden and al Qaeda, now America's most wanted. But does the list end there? Did they have help?

AZIZ: We don't know Mr. Bin Laden. We don't have any contact with him. We don't have any relationship with the Taliban government.

SADLER: Suspicions of an Osama bin Laden/Saddam Hussein connection first surfaced when a Czech Republic official reported that Mohamed Atta, the alleged leader of the September 11 hijackers, might have met with an Iraqi diplomat in Prague last April.

And recently CNN has learned from coalition intelligence agencies that they have tracked alleged high-level meetings between Iraq and al Qaeda operatives dating back seven years.

Iraq strenuously denies it supports terrorism, and any connection to al Qaeda.

RICE: We've long said that we are looking at all of the possible evidence about Iraqi involvement. I think it's early to judge what that might have been. SADLER: The United States has not made any accusation that Saddam Hussein is linked to the hijackings, nor is Iraq a focus of the U.S. anthrax investigation, which points towards domestic sources.

The Bush administration did, however, recently name Iraq as one of five countries suspected of building germ warfare arsenals.

AZIZ: Iraq has nothing to do with terrorism. We worked on anthrax in the '80s and the '90s. We destroyed all our anthrax.

SADLER: Iraq's denials have not impressed President George Bush. He continues to lob threats in the direction of Saddam Hussein.

MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: What would you say about Iraq as you begin to look at the next steps in the campaign against global terrorism? What message would you like to send?

GEORGE W. BUSH: Well message is, is that is if you harbor a terrorist, you're a terrorist. If you feed a terrorist, you're a terrorist. If you develop weapons of mass destruction that you want to terrorize the world, you'll be held accountable.

SADLER: Strong words. But U.S. military action is an uncertain proposition, with European and Middle Eastern leaders opposed to attacks on Iraq.

In a recent appearance, Saddam Hussein was as resolute as ever.

SADDAM HUSSEIN, IRAQI PRESIDENT (through translator): The Iraqis have been tested for a long time, and they have had enemies of all forms for 20 years, and have proven that they are capable of facing enemies because they are in the right. The enemy who is in the wrong is bound to be defeated.

ABURISH: He's there. He is right when he says if I survive, I win. To him, survival means victory. If we judge him by the yard stick that he assigned himself, then he has indeed won the Gulf War.

SADLER: Saddam Hussein's hold on power appears to be as strong as ever. The United States has launched a new war on terrorism, a war that's likely to be waged on many fronts, possibly including an old U.S. nemesis, Iraq, and a new stage of an unfinished war.

(END VIDEOTAPE)

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